All in all, you’re just another brick in the (pay) wall

Ted BartlettMar 18, 2011 2:00 PM

I still haven’t gotten to the Hack 30 enough to publish anything on it today, and I kind of got distracted yesterday by an interesting media story. In case you missed it, the New York Times intends to put up a pay wall on their website, which will affect anybody who wants to read more than 20 articles per month. They seem to be making a bet that one of two things will happen. The first is that their readers won’t be able to live without their content, and they’ll pay. This assumes that their content really is better than what consumers can get elsewhere, and maybe it is in some cases.

The other possible outcome is that other newspapers will follow their lead and institute pay walls of their own, thus creating a new equilibrium where people pay for internet content and the Times still rules the roost based upon their prestige and presumable content advantage.

The way that content gets to people is something I’m interested in and want to start a discussion about today. Here at IAOFM, we haven’t even chosen to deploy any advertising at this point; but obviously, most websites are making their revenue on either a per-impression (meaning pageview), or per-engagement (meaning the clicking of a link) basis. Pretty much anybody can put up a website, enable Google AdSense and make a few bucks with it. By “a few”, I literally mean a few, unless you’re getting a lot of pageviews. My total AdSense payout for four months' worth of SmarterFans.com was about $41, which didn’t even cover my hosting fees.

If you think about the way that content has historically gotten to consumers and how content producers have been remunerated, I think we’re clearly in the midst of a major upheaval. When printed daily newspapers ruled the day, they hired reporters and editors and paid them salaries to produce content. They sold both subscriptions and advertising, and those two revenue streams combined to make them profitable vis-à-vis the costs they incurred doing their business.

Reporters like to get paid, which is why they're so militant against bloggers and independent site proprietors who aren't necessarily in it for the money. You get the whole pajamas/mother's basement nonsense, even though most of us are a lot smarter and more broadly capable than the average reporter. It's protectionism on the part of the reporters and newspaper execs - and I don't blame them, although it isn't going to work in the long term.

Television has long worked in a similar way, where production companies have largely created programming and sold it to networks for broadcasting. (Networks also sometimes create programming in-house, of course.) The broadcast networks (meaning CBS, NBC, ABC, and FOX) sell advertising on their programming. The “cable” networks (eg USA, TNT, and FOX News) enter into arrangements with cable and satellite providers (carriers) involving carriage fees and advertising sales. For the most part, the carriers pay the networks on a per-subscriber basis and then sell ads to local and national advertisers.

The internet has thrown a monkey wrench into the newspapers’ model, because it takes very little technical sophistry to publish written content online. If you can register with Wordpress.com, you can be blogging in 15 minutes. As long as the content that the newspapers put out is superior, they should be able to keep getting the pageviews (and consequently the advertising revenue) they need. When it’s not, they have a lot of problems.

We compete with the Denver Post, and our content is consistently superior to theirs. One of our loyal readers wrote their editor, Greg Moore, awhile back, and told him that sites like ours were kicking the DP’s ass on a consistent basis. Moore responded with one of the least self-aware commentaries I’ve ever seen. He said that Captain Obvious was the best in the business, and that the DP was responsible for the successes of Adam Schefter, Bill Williamson, and others. He also bragged about how none of the blogs had “Spygate II”, and how the DP was all over it.

“Spygate II”, which was basically an offensively- and stupidly-named mountain-out-of-a-molehill, does show that there is value in having somebody present on-scene to conduct reporting. I like Lindsay Jones’ work, and you’ll never get an argument from me that four guys in New York, Cleveland, California, and TJ’s “Parts Unknown” can holistically cover every aspect of the Denver Broncos. We’re not at the facility every day talking to players and coaches, and some of what we do does obviously build upon that reporting work that Lindsay and others are doing.

The question is, are you willing to pay for that reporting work on a per-drink basis? I don’t think that many people are. I don’t think that people care enough about Woody Paige’s commentary to discretely pay for it. They read him because he’s there. The same goes for any columnist, including me. (Good thing I don’t do this to get paid.) If there is a population of 100 people who like your writing, I can’t imagine that any more than 15 of those people like it enough to make a cash expenditure for it.

I think that the path the Times is embarking upon is a big mistake that’s going to further cripple the already-dying newspaper business. I do think that other papers are going to follow suit, in search of short-term revenue boosts, and it’s going to backfire horribly for all of them.

More and more, readers are going to be driven to sites like this one where there isn’t a pay wall. I even think I know where the reporting will come from. I know a guy from the comments at MHR and from Twitter named Steve O’Reilly. He’s from the same part of Connecticut as me, and I’m pretty sure we’re about the same age. Steve is a contributor to a website called SkinnyPost.com, and his main area of focus is interviewing players via Skype and talking about what they’re doing on and off the field. To that end, he has done a good job in cultivating Twitter relationships with a lot of NFL players. He’s kind of like a white male version of Josina Anderson, in other words. This tells me that reporting can be done in a new way, and I think it soon will be.

If a site like ours decided to have somebody local to Denver focus on regularly visiting the facility and talking to players and coaches, we could holistically cover the team, and we’d never need to rely on anybody else’s reporting. I’m not saying that we have any plans to do that at this time, or that this has even been discussed, but I think that this is the leap that independent websites like ours are naturally going to be making in the near term. This impending pay wall blunder is going to help push us there, because people are going to stop reading the newspaper sites, and seek out content elsewhere.

I pay for one online subscription currently - ESPN.com’s Insider service, which I’ve had for maybe eight years. I think it’s been getting less and less useful as the years have gone by, but they still have some things in terms of NFL Draft coverage that I find value-adding. I just signed up for another service at ProFootballFocus.com that breaks down every play of every NFL game and grades each individual player on them. (I’d never just parrot something like that, for the record, but if they told me a guy was playing well, I would let it drive me to take a look for myself. I'm basically one guy with one set of eyes, so I decided to hire some new eyes to help me.)

Those are very specialized services, and as such, they can expect a guy like me to consider paying them an annual fee. The New York Times is not. I like to read Paul Krugman’s columns sometimes, but not enough to pay per drink. (Chances are, if I read anything from the Times, his stuff will get me to my 20-drink limit.)

I think this is all just another part of a massive, unstoppable media realignment that continues unabated. Most of the newspapers will die, and the best blogs and independent websites will rise to the top of the written space. Cable and satellite TV will continue to bleed, while technology companies like Google, Apple, and others reimagine the video experience. I have Google TV in my living room and Apple TV in my bedroom, and they’re both very cool, while only scratching the surface of their potential. I do think that TV shows will be accepted in the marketplace as a-la-carte episode purchases or series subscriptions, because it’s a richer entertainment experience than what a newspaper or website has to offer. At some point, a great one is going to be produced which isn’t offered to cable or satellite, and is only available through Google or Apple.

It’s the Wild West in the media sphere, with everybody trying to figure out what the new world order is and make it be what they want it to be. What do you think? Is there one thing you’d pay for, and something else that you wouldn’t?

1. I’m not in the arguing business, I’m in the saying what I think business.
2. I get my information from my eyes.

Additionally, there are workarounds for the NYT, including the easiest, delete the cookies stored on your computer every day. That resets the NYT counter back to 0.

Posted by BigDave on 2011-03-19 19:35:18

Jvill - I was thinking more along the lines of non-governmental for the journalism institute. I think the only way you can have fearless journalism is when nobody can ever threaten to take away the funding for it.

Something that operates solely on donations is the purest way to keep everybody honest, and prevent a lot of shenanigans.

Posted by Ted Bartlett on 2011-03-19 12:47:02

Very good stuff, everyone. I read pieces of this article on 3 different occasions today before I was able to read it completely - just now. If I were reading the NYT, I would have 17 hits left.

Many of my days are like that - I am able to grab bits of this blog throughout the day and finally in the evening, tackle the entirety of the articles.

I usually read Krugman&#8217s blog in the NYT as well as his articles. The comments to his opines are, IMO, very good and one of my sources to what people are really thinking. I hope that their paywall does not diminish the amount of comments there. I use some of those comments in my political and economic discussions.

I don&#8217t mind paying for something so long as it is useful and the price is not out of proportion.

Thanks for the piece, Ted and everyone for your comments.

Posted by BlackKnight on 2011-03-19 04:52:32

Great article, and great comments. Thank you, to each.

There was a time when owning a local newspaper, particularly in the rural South, was very much a way to print money. That changed long ago, but anyone who&#8217s interested in having that process explained in some detail, while wrapping a nice murder mystery around it, should read John Grisham&#8217s book The Last Juror. It&#8217s a heck of a read and one of the best things, IMO, that he&#8217s produced, but it&#8217s look into the time that changed the news industry is worth the read all by itself.

Posted by Doc Bear on 2011-03-19 04:31:10

Couple if things.

Big Dave is spot on. The different media outlets serve different markets, but there is tons of overlap. Hell half the content ON blogs is complainintng about those doing the original reporting.

Also, while the economics are changing, newspaper will still be around. They lost a lot of revenue when the market for classified collapsed (down about 90% over the past 10 years or so), but the heavyweights will still be around. WSJ has a successful pay model. However, it&#8217s true margins are slim, and newspapers are no longer the steady cash flow the way they once were (especially the locals).

It is also true that corporate raiders like Sam Zell bought newspapers, and then employed the typical leveraged buyout strategy: make the debt burden so high the paper is forced to innovate efficiencies or business model. Only problem is newspapers are built for news-gathering not business model innovation&#8212certainly not like a technology company might be&#8212and crashing down came The Chicago Tribune. But then so did The Rocky Mountain News. But in the case of some papers, the business model wobbled but it didn&#8217t break until it was wrecked but the same dudes screwing up everything else right now.

Also, I do think it&#8217s fair to saw Schefter and Williamson were launched by traditional media, and elevated by online exposure.

Either way, it&#8217s a big ecosystem, everybody has got a role.

Bob Morris, makes a lot of sense. Although I&#8217d add that part of the reason the bloggers exist is because of frustration over the lack of many contemporary, effective reporters asking, &#8220why?&#8221

Love the idea of a publicly owned press foundation. Obviously you know it could never happen now. We&#8217re in the business of selling off vital government assets, not building them.

Couldn&#8217t agree more about Joe Ellis though - I personally don&#8217t ever read those walking press releases. I recently pulled the MHR feed from my RSS because they incessantly republish that stuff. Should just best left to SI and ESPN.

Posted by jvill on 2011-03-19 03:57:16

Thanks for the comments guys. I hadn&#8217t heard about any of the micro-billing; that&#8217s interesting stuff, and I could see where it could become part of a workable model.

As far as reporting goes, I think it&#8217s obviously very important. I&#8217ve long advocated for a nonprofit journalism institute of some sort, which would collect donations from people and organizations who appreciate good reporting, and conduct reporting operations, in turn making that content available for free reproduction. Sort of like NPR, except with no federal funding, so nobody could politicize it. This is the sort of thing that I would contribute money to, because any society needs good journalism.

I&#8217m an analyst, obviously, and I have no interest in being a reporter. They&#8217re doing something totally different than I am. I&#8217ve told this story a number of times over the last few years, so forgive me if you&#8217ve read it, but I was once asked during a survey by a Penn State journalism student where I get my information from.

I didn&#8217t really understand the question, so I asked him what he meant. He says &#8220Do you get your information from other football sites, or what?&#8221 I said no, I get my information from my eyes. I think the kid thought bloggers were taking information from one place, and regurgitating it somewhere else. Some may be, I guess, but that&#8217s absolutely not what I&#8217m doing.

I don&#8217t think I ever need to talk to anybody to do what I do, around analyzing football games. I think that doing so would actually have the strong potential to damage my product. I never want to talk to Joe Ellis, and I can&#8217t imagine what value would be added if I did. He&#8217d say what was on his agenda, and I&#8217d be left to faithfully publish what he said. That&#8217s boring to me, so I&#8217m glad somebody else has that job.

It&#8217s even boring for me to read, because I don&#8217t honestly care that much what he thinks about anything. There are some people whose thoughts I find interesting, including many commenters on this site, but Joe Ellis isn&#8217t one of them.

Anyway, I hope that this pay wall gambit works out just like BigDave said. The newspapers lose 90% of their online viewers, and their ad revenues go up. Good for them, and good for sites like this one. Those eyes are going to go somewhere, and I&#8217ll be working to drive them here. They won&#8217t miss Woody and the Dullards much at all.

Posted by Ted Bartlett on 2011-03-18 22:05:54

As somebody who works for a newspaper, I can offer you a few insights.

1. While there are lots of people who do a good job with blogging, there is a difference between blogging and reporting.

What the job of a reporter is supposed to be is to not just tell people what went on during a game, a meeting, or whatever it is a reporter is supposed to cover. The reporter is supposed to ask questions of those involved to get to the &#8220why&#8221 regarding the subject. It&#8217s not just about explaining a process or an idea, but getting insight from those involved as to why they chose the route they took. It also involves following up with anyone as needed to get things clarified or explained if the reporter finds himself or herself unable to explain it to the readers.

I will say there are plenty of bloggers who do a good job explaining ideas, processes, etc., and explaining terminology that their readers may not understand. But that being said, how many bloggers can you name who actually talk to the people involved?

If independent websites do take the place of newspapers or other media, then soon there&#8217s going to be readers who will ask the bloggers this: &#8220Are you talking directly to the people involved? If not, why aren&#8217t you doing that to get inside their heads and find out why they are doing what they are doing?&#8217

With that said, this leads me to my next point&#8230

2. The problem I see with much reporting these days is it&#8217s more about analysis than reporting&#8230 or in other words, it&#8217s fewer stories and more columns.

Much of what the Denver Post staff writes that gets criticized is analysis on the part of those reporters. That&#8217s the problem those reporters have&#8230 they do too much analysis and not enough getting into the minds of the people who are part of the Denver Broncos organization.

And rather than ask questions of those involved to explain why something is done, the reporters often tend to inject their own opinions. Now, it&#8217s fine for reporters to do the occasional column, but the way I&#8217ve always approached it is this: A column or any analysis should be thought of as the frosting and not the cake. The cake is the reporting&#8230 getting as much information as possible and probing the minds of your sources. Columns are a chance to let the reporter or columnist speak his or her mind, but it&#8217s not something the reporter should put too much emphasis on.

And there are those like Woody Paige who do columns and nothing more&#8230 but even with columns and analysis, you can still talk to other people, probe their minds and use what&#8217s on their minds to explain a point.

3. I believe newspapers will survive in some form, but they will have to be more specialized toward smaller communities and they may not be in &#8220paper&#8221 form.

The newspaper I work for is a twice-weekly publication that serves a small city of about 7,000 people, along with a few surrounding rural communities, most of them with less than 1,000 people. For these communities, a small publication that serves those people is going to be essential because that&#8217s likely to be their source of news and information. Finding a blogger that concentrates on such areas is difficult.

With that said, such publications might not be printed the way they are now. At our newspaper, we have started offering subscriptions online, but are offering the paper itself in PDF format. That&#8217s allowing those people who currently subscribe to the paper, or who may wish to subscribe, an alternative means of getting the full paper. We do have a website that offers some content for free as well.

I would anticipate that, over time, more people will take the online format, but are likely to continue to subscribe because they want to know what is going on in the local community. They can get their state and national news elsewhere. And in the long run, it should help our publication because newsprint is a major expense of running a newspaper.

I will add that our newspaper is not a member of the Associated Press. It&#8217s not just because we focus on local content, but it&#8217s also because subscribing to the AP wire service costs a lot of money.

Posted by Bob Morris on 2011-03-18 21:22:18

First, I think you should have ads on the site. Not google ads, but probably a targeted source. You may not know who I am and what I like (even if you do), but if you have an affiliate ad on here where I can buy my NFL merch and you get a cut, that&#8217s helpful to you and me. I&#8217m going to buy Broncos gear. It&#8217s my addiction. Why not feed that addiction while a portion (7-10% in this case) go to you fine fellows.

While that won&#8217t result in great money in relation as having the traffic where you can directly sale ad space to Mitchell & Ness, it would probably serve better than what google forces you to show.

I worked in publishing for over 10 years. I will save what would be a lengthy comment on my take on the industry. In the short term, those that can make the pay jump will. In the long term everything will be either packaged (like cable tiers) or sold via micro payments. With the greatly reduced distribution costs and the wider audience all these media channels can reach, .50 a month for most website&#8217s content can be very profitable in it&#8217s slice of revenue.

Lastly, speaking of slices of revenue. No singular model can ultimately be relied upon. If you&#8217re looking for multiple revenue streams, I would pay for IOAFM coffee mugs and t-shirts. I will buy any product&#8217s t-shirt if it&#8217s quality and around $20. I refuse to buy clothing with logos, so this is generally how I fill my closet. I&#8217m not going to pay some clothing brand money to advertise their clothing. I&#8217m strange though.

Posted by Joe Howard on 2011-03-18 20:44:02

I remember reading an article on Yahoo! a year or so ago that talked about The New Yorker going from a free to a pay site. On their first day, they had 8 subscriptions. Eight.

Considering how many millions of people used to read that magazine (which I understand is different than a daily), I&#8217m sure that was a serious gut-punch to the folks there.

Posted by QDoc on 2011-03-18 20:40:57

Walp Ted, now that&#8217s interesting.

Newspapers and magazines do something that no blogger can afford to do and that&#8217s original reporting. You guys (here, at MHR and other blogs) rely on information that others are paid to get. You collate it, parse it and comment upon it. But if you had to cover something on a day-to-day basis, go with the team to all the games, go to practice, you&#8217d be out of business. Kudos to Andrew Mason for what he&#8217s doing over at Max Denver.

What the newspapers (let&#8217s keep it to that for now) aren&#8217t dying, but they are going through a paradigm shift. They will all eventually realize it&#8217s time for them to dump their ridiculous print model and deliver their product electronically. That will save them 35-50% of their costs, money they can plough into hiring new reporters and making their product great once again.

The NYT is doing the paywall backwards. What they are doing is rewarding the casual reader and punishing their faithful. What they should do (and all media should do, but it won&#8217t happen in an English-language market where there are too many sources of the same information) is charge micro-payments using an evergreen funding system &#40think Skype&#41 and once a user has read a certain number of articles he gets the rest of the day/week/month/year for free. This will happen, it&#8217s happening in Slovakia next month as all the newspapers are going behind a paywall, but it won&#8217t happen in the US unless the MSM agrees to a cartel. I think the courts would have something to say about that.

Anyway, the Times of London went behind a paywall last June and their page-views went down 90% but their advertising rates went UP 400% (they are better able to target their readers now) and they actually make more money now than they did before the paywall went up. The dynamics are far more complicated that they appear because of PVs vs. targeted advertising.

If,in five years you can read anything for free of any value (besides opinion and tweets), I&#8217ll eat my hat.

Posted by BigDave on 2011-03-18 19:50:25

The difference for me between places like the Denver Post and communities like this one and MHR is all in the members.

The Denver Post appeals to a certain type of market, and that market is less informed about football in general and the Denver Broncos. That type of market seeks out the &#8220gossip&#8221 for lack of a better term and get far more enjoyment out of reading about how the Broncos are going to draft Blaine Gabbert or start Kyle Orton, than they do reading about how a switch to a 4-man front effects the personnel currently on the roster. These types of articles are based loosely on certain things that people like John Elway have said. Maybe they are right, maybe they are not but before the outcome, these types of articles are merely speculation. Any fan that follows football and the Denver Broncos enough to regular this site or a similar site like MHR can make their own assumptions or speculations without the help of the DP. However, the DP clearly has a market and they appeal to it quite successfully regardless of the amount of bashing they take from the well informed target market.

Personally, I would never pay for a website that appeals to that market because I can connect the dots just as easily as the articles and the comment section offers absolutely nothing to myself (because, obviously the type of readers that fit in that type of target market are the same ones posting on the website.)

Sites like this one and MHR offer great articles, but the articles are merely a starting point to the community conversation. It is the comment sections that are where the true value is for these type of blogs. It is in the comment sections where numerous like-minded individuals present ideas and concepts that otherwise would have never entered my brain.

In my opinion, that is where the value is, and that value does not have a monthly subscription.